Citibank, N.A. v. Vernikov, doing business as Interpage Co
Attorneys and Parties
Brief Summary
Commercial lending—bank’s contractual right to cancel a revolving business line of credit after periodic credit review, enforcement of a personal guaranty, and replevin of collateral upon default.
Supreme Court, Kings County denied the bank’s motion for summary judgment on breach of contract, the personal guaranty, and recovery of collateral, and denied dismissal of affirmative defenses and counterclaims.
The Appellate Division reversed and granted summary judgment to the bank on breach of contract, the guaranty, and recovery of collateral, and dismissed all affirmative defenses and counterclaims.
The agreement unambiguously allowed the bank to cancel or reduce credit at any time upon written notice after periodic credit review; the bank established default through the agreement, guaranty, and affidavit of its attorney-in-fact; the defenses were conclusory or abandoned; the implied covenant of good faith and fair dealing claim failed because cancellation was expressly permitted even after acceptance of the annual fee.
Background
In August 2018, Vernikov applied for and obtained a $100,000 revolving commercial line of credit from Citibank, governed by a terms letter, application, and terms and conditions. The terms authorized periodic credit review and permitted Citibank to change terms or cancel credit at any time upon written notice, without liability, including for adverse changes in financial condition. Vernikov executed a personal guaranty and granted a security interest in all personal property and fixtures (collateral). On August 27, 2019, Citibank confirmed the annual fee was paid and the account renewed, reiterating that periodic review still applied. On September 9, 2019, after review, Citibank canceled further borrowing and required repayment of the outstanding balance in 48 monthly installments. After subsequent defaults, Citibank noticed default (March 6, 2020) and accelerated the balance (February 19, 2021), then sued for breach of contract, on the guaranty, and to recover the collateral.
Lower Court Decision
The Supreme Court, Kings County denied Citibank’s motion for summary judgment on breach of contract, on the guaranty, and for recovery of the collateral, and declined to dismiss Vernikov’s affirmative defenses and six counterclaims.
Appellate Division Reversal
The Appellate Division held Citibank made a prima facie showing through the agreement, guaranty, and an attorney-in-fact affidavit of obligations and default, and that the terms unambiguously allowed cancellation after periodic review even if the renewal fee had been paid. Vernikov failed to raise a triable issue on any defense, including the implied covenant of good faith and fair dealing. The court granted summary judgment to Citibank on breach of contract and the guaranty, dismissed all affirmative defenses, granted replevin of the collateral under the security agreement upon default, and dismissed all counterclaims, noting some were conclusory and others were abandoned.
Legal Significance
Affirms lenders’ ability to enforce contractual provisions permitting cancellation of business credit lines at any time upon written notice after credit review, even post-renewal fee, and to obtain summary judgment on guaranties and replevin where defaults are shown. Reinforces that conclusory defenses and unaddressed counterclaims are insufficient and may be deemed abandoned on motion or appeal.
When loan documents clearly permit periodic review and cancellation at any time upon notice, a lender may cancel a business line of credit even after accepting an annual fee; borrowers must present concrete facts disputing default or contractual rights, or the lender will obtain summary judgment on breach, guaranty, and collateral recovery, with conclusory or unargued defenses deemed abandoned.